Sunday, March 17, 2013

Raid on Cypriot deposits shakes Europeans' faith in savings

(Reuters) - Europeans' faith in the safety of their savings has been
shaken by a levy on Cypriot bank deposits to pay for a bailout, even
though there was no sign of a rush to withdraw cash in Madrid or Dublin.People told Reuters they were
angered but unsurprised that politicians should dip into citizens'
deposits. And as bankers expressed concern the proposed terms of
Cyprus's bailout could unnerve savers elsewhere, some leftist leaders
voiced outrage.

Euro zonefinance
ministers want Cypriots to pay up to 9.9 percent of their deposits in
return for a 10 billion euro ($13 billion) aid package. If approved by
the island's parliament on Monday, it will be the first time savers have
had to foot part of the bill for a European bailout.

"What
they did to the Cypriots was a disgrace," said Maria Spyrou,
57-year-old Athens housewife who says she must support a daughter, a
nurse, who hasn't been paid for nine months."We won't pull our money from the bank here," she said. "In Greece, they have found other ways to rob us, more ingenious and sly ways -- with fuel taxes, property poll taxes, you name it."

The
chief of Greece's main opposition, anti-bailout Syriza party, leftist
Alexis Tsipras, blamed the move on German Chancellor Angela Merkel. "We
must all together raise a shield to protect the peoples (of Europe)
from Ms Merkel's criminal strategy," said Tsipras, who wants a
pan-European debt conference to forgive debt.

In
Lisbon, Joao Semedo, leader of Left Bloc, one of the country's smaller
left-wing parties, warned Portuguese deposits would be at risk if
European creditors insist on more austerity."The Portuguese government will not hesitate in resorting to bank deposits," said Semedo.Greece and Portugal, like Ireland and Spain, have received European aid to shore up their economies, in return for painful cuts to spending and tax hikes.

In
northern European countries, concerned at how much they might have to
pay for bailing out indebted states, there was little sign of anxiety on
Sunday. Finnish Prime Minister Jyrki Katainen said the levy was fair.European
officials have been at pains to stress that Cyprus is a special case -
with terms not applicable to other bailouts because of the size of
Cyprus's banking sector and its large foreign deposits.
NO SAVINGS TO WITHDRAW

But
in Madrid, Ana Garcia, a 62-year-old worker at a mental health centre
who was attending a protest against the privatization of the health
service on Sunday, thought Spaniards could also face a hit on their
savings.

"European countries are
very calm thinking it could never happen to them. But we'll all get
involved sooner or later," said Garcia, who added she had no savings to
take out of the bank even if she wanted to.News of Cyprus's bailout added anxiety to St Patrick's Day celebrations in Dublin.

"It's
outrageous" said Carmel Madden, an Irish 54-year-old former
businesswoman. The news from Cyprus made her worry about holding
proceeds from a house sale on deposit in a local bank."I'm more concerned now than I was eight months ago when I sold the house. I just don't know where my money would be safe."She said she was not planning any withdrawal in the short term, mainly because she had not found a less risky alternative.

Despite
the assurances that Cyprus is an exception, the tax on bank deposits
risks unnerving savers elsewhere in Europe, according to the chief
executive of one Greek bank."It's
an extreme move, Cyprus may be a tiny state but this will injure the
fragile sentiment in the euro zone's south," said the banker, who
declined to be named.

Another
senior Greek banker said: "What timing, just when the crisis seemed to
be stabilizing. How can savers not worry that this may happen again
elsewhere as part of bailouts?"

In Italy,
where media and political parties are focused on the quagmire following
last month's deadlocked election and support for an anti-establishment
party has soared, many turned to social media to express their concerns.

"After
Cyprus I suggest we find a way to protect our savings from possible
forced levies ... the solutions exist!!," read a tweet by Giovanni
Cuniberti, independent financial analyst and lecturer at the University
of Turin.

(Writing by Jason Webb;
Additional reporting by Conor Humphreys in Dublin, Andrei Khalip in
Lisbon, Antonella Ciancio in Milan, Jussi Rosendahl in Helsinki and
George Georgiopoulos and Renee Maltezou in Athens; Editing by Matthew
Tostevin)